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GDP Figures Show Partial Lockdowns Work

We partially locked down the economy in April this year, and yet business and economic activities flourished. We also managed to contain the virus spread for the most part of the second quarter by balancing the effort with economic


The gross domestic product figures in the second quarter showed the economy expanded and created more jobs, with the risks of virus infection being managed well.

The 11.8 percent year-on-year growth reported by the Philippine Statistics Authority in the second quarter of 2021 renewed our hope that a full recovery is in the offing if we strive for it. It came as refreshing news in August as Metro Manila and other areas were placed under the enhanced community quarantine (ECQ) for the third time since the pandemic began in March 2020.

Authorities have declared another lockdown after active Covid-19 cases began to climb, led by the Delta variant, which was wreaking havoc across Southeast Asia. The virus reproduction rate went above 1.0 again and hit as high as 1.7, which means cases could replicate faster in the coming weeks. If we are going to manage the situation, we should keep the reproduction rate below 1.0.


I believe health-focused measures would be more effective in containing the spread of the virus, such as faster vaccination, massive testing of the population, intensified health protocols and expansion of healthcare capacities. The opening of modular hospitals with a combined capacity of 108 beds built by the Department of Public Works and Highways inside the Lung Center of the Philippines compound in Quezon City is a welcome addition to our healthcare facilities. We hope that more hospital beds would be built soon.


We should focus our attention and resources to building more healthcare facilities to directly address the needs of Covid patients, instead of imposing widespread lockdowns. We should also intensify the isolation of patients and contract tracing at the barangay level, where people know one another, and at workplaces to protect one another.


A general lockdown to contain the virus spread would hurt the whole economy, impoverish communities and take away the jobs of millions of workers. The National Economic and Development Authority estimated that the two-week ECQ in Metro Manila would result in P150 billion worth of production losses. I hope the ECQ period from August 6 to 20 would give us time to reexamine the capacity of our hospitals and our inventory of medical supplies, such as oxygen and ventilators, so we can immediately replenish them if needed.


The Duterte administration and economic managers deserve credit for allowing the flow of goods to continue despite the ECQ. Remember that we also implemented ECQ and a modified ECQ in April and May this year, yet our GDP still grew 11.8 percent in the second quarter. The government allowed cargoes to get in and out of Metro Manila and permitted business-process outsourcing companies, factories, construction firms and other essential sectors to continue operations.


In the first ECQ last year, we closed around 75 percent of the economy, resulting in tight supply of commodities. But we can no longer afford to shackle and starve the economy, otherwise we might create a bigger problem than the one we are trying to solve.


Aware of this, the Department of Trade and Industry tweaked the ECQ mode to allow key industries and services to operate and keep public transportation available to essential workers.


While the second-quarter growth ended five quarters of economic recession, we have yet to return to pre-pandemic level. The 11.8-percent expansion was not enough to cover the 17-percent contraction registered in the second quarter of 2020. Hopefully, the third-quarter numbers will continue to reflect growth despite the stringent lockdown in August.


What I find encouraging in the second-quarter GDP performance are the 22.3-percent growth of manufacturing and the 25.7-percent increase in construction. These two essential and labor-intensive sectors support our exports and infrastructure projects. Public construction surged 49.7 percent, while private construction grew 19.1 percent in the second quarter.


The government’s economic team declared that managing risks, instead of shutting down large segments of the economy, stands a better chance of improving both economic and health outcomes.


While the agriculture, forestry and fishery sector declined 0.1 percent, the industry sector grew 20.8 percent and the services sector expanded 9.6 percent. On the demand side, consumer spending improved by 7.2 percent, while investments jumped 75.5 percent, as companies renewed their confidence in the local economy.


Government spending declined 4.9 percent in the second quarter, but this was mainly due to the high base effect from the distribution of subsidies to Filipino families in the second quarter of 2020.


Meanwhile, our gross national income grew 6.6 percent in the second quarter, which was lower than our GDP growth because of the fewer international transactions this year. National border restrictions remain in place, resulting in the muted performance of the travel, transportation, tourism, hotel and leisure industries.


While we may not be able to fully contain the pandemic this year, we have learned to make the necessary adjustments to protect the economy by making sure our essential workers are productive. Let us not lose sight of this lesson, so that our economy will continue to function well despite the stringent measures put in place to stop the transmission of the virus in our communities.


I hope that our orders for 148 million vaccine doses this year will arrive on time so we can administer them to 70 million Filipinos, or the entire adult population, by the end of 2021, and achieve herd immunity soon. If we do that, we may avoid another general lockdown next year.


Let us also encourage more Filipinos to get inoculated against Covid-19, so that we can protect ourselves, our families, our communities, and our economy.



Business Mirror/Author/MannyVillar